Currency Updates:
U.S. Dollar Trading (USD) heavy gains in the stock markets in every session yesterday saw the USD sold with demand for riskier assets hurting the safer haven. September Industrial Output increased 0.4% vs. 0.2% previously. There is a lot of event risk on Thursday with the EU summit beginning and Chinese GDP for Q3 being released. Looking ahead, September Housing Starts forecast at 0.77mn vs. 0.85mn previously. Also Weekly Crude Oil Claims forecast at 1.4mn vs. 1.7mn previously.
The Euro (EUR) the EUR/USD broke 1.3000 in the European session and then pushed to 1.3100 in the US session. There is still some uncertainty regarding Spain and Greece and we should hear more from this at the EU summit on Thursday. Spanish rumors are suggesting a credit line could be created while they review a larger bailout. German insistence on austerity measure to countries that receive money is delaying the process.
The Japanese Yen (JPY) EUR/JPY was the strongest currency in the market trading above Y103 and well supported from both the EUR/USD and USD/JPY moves. The outlook is mixed for the USD/JPY with heavy resistance above Y79 to Y80 likely capping the topside and range trading continuing. US data has been improving of late and this is underpinning the major’s move higher.
The Sterling (GBP) moved above 1.6100 and topped out at 1.6130 with the bulls back in control so far this week. The GBP/USD will follow the lead of the EUR/USD although EUR/GBP is grinding higher so perhaps the movements will be at slower pace. Looking ahead, September Claimant Count forecast at 0 vs. -15k previously. MPC minutes forecast at 9-0 for no change last meeting. Also October UK Unemployment Rate forecast at 8.1%.
Australian Dollar (AUD) was left behind in the risk rally only able to gain 30 pips to 1.0300 during the day as EUR/AUD continued to be unwound to the topside and RBA is likely to cut rates next month. Data from China has been stable and Thursday’s GDP release will be closely watched by AUD/USD traders.
Oil & Gold (XAU) Gold moved back to $1750 as the USD weakened across the board. OIL/USD moved higher but not aggressively to $92.50.
